The island I live on is a hotbed for business start-ups. Many people come here to start a new life, and plenty of those arrive with a business idea or a plan to start something new. Coupled with that, the island has recently been inundated with a whole raft of Multi Level Marketing opportunities, and there are also many people who choose to supplement their salaries with a small business “on the side.”
As you can imagine, as with anywhere, many of these new businesses fail, usually in the first year of operation. I’ve seen both sides in my own set-ups during the years, and have become intimate with those twin imposters, success and failure, so I thought I’d share my quick tips to success, in the hope it may help one or two others.
When I distil it all down, there are just six things most business owners get wrong, and they are:
Having a plan
I’m talking here about a detailed one year business plan, a loose 3 year plan and a vague 5 year plan. The first is obvious, and should go into huge detail — what are you going to sell and to whom? How are you going to do it? How many sales will you make? What are the costs of those sales? That one year plan should also include a detailed budget, and those objectives need to be reviewed every week. Yes, every week.
The three and five year plans are about giving you direction — they will inform what you do and how you think. What’s your business going to look like? How many people will be working there? What does it feel like? Use visualisation to “train your brain” to think along the right lines. Those longer term plans will change over time, and they may even stretch into the more distant future, so always refine them and then re-visualise them.
Taking time out of “doing” work in order to strategize
This is so hard for most small business owners. They spend their time working “in” their businesses and not “on” them. The only way to think about next steps, work out how to take new opportunities and discover more efficient ways to do things is to spend time thinking. It’s perfectly legitimate to take an hour with your feet up on your desk, or to go for a walk, to give yourself that thinking time. Many of my most successful decisions have come from time spent away from my desk, diving or running or sitting around. The trick is having a mechanism to capture those thoughts and ideas before you’re left wondering what that great idea was.
Recognising that cashflow is pretty much all that matters
Poor cashflow is the single biggest killer of small businesses. That’s because it costs you time and creates so much stress — time wasted chasing money, moving money from account to account and then the stress kicks in and that reduces your ability to carry on working effectively. Cash is more important than new orders — in the start up phase you should be doing a weekly cashflow chart and updating it daily, unless you have a large amount of capital behind you.
Investing in the business
We live in a culture where everyone wants stuff cheap, or for free, and nowhere does that apply more than it does online. People waste so much of their precious time working with crap software, or creating a free website, or choosing to spam adverts all over Facebook for their businesses, thinking they are getting free advertising. Most software is inexpensive, and you can get a website built for very little money. Just to give you one example, I use a tool every day online that costs me $10 a month. I’ve estimated it saves me about 8 hours work a month. Is my time worth more than $1.25 an hour? Of course it is!
Learning to say no
As small business owners, we’re almost programmed to say “Yes!” And then worry about how we’re actually going to do whatever it is we’ve agreed to. It’s human nature to want to please people, but the danger is you end up doing things cheaply, or doing deals which lose you money. Don’t be afraid to turn some people down, politely, but firmly. I remember my Dad telling me years ago “It’s the business you refuse that has the biggest impact on your profitability.” It took me years to understand the truth of that phrase.
Working hard. Seriously bloody hard
And finally here’s the kicker! In all my years I’ve never come across a single, successful business person who doesn’t work hard. Don’t fall for the myth that the small business world is populated by people sitting on the beach and occasionally opening their laptops to see how much money they’ve made. In my experience, that’s complete bollocks. Be prepared to pull an all-nighter occasionally, to deal with an issue that arises on a Sunday morning, and learn to do without hours wasted in front of the television or having a lazy morning in bed. I worked in the corporate world for the first half of my career, and I’ve been self employed for 15 years. I’ve consistently worked harder and for many more hours each week ever since I left the corporate world. I’m not complaining, because I love what I do, but I see many people who really believe that having your own business is a passport to swanning around while other people do the work.
As you can see, none of the above is rocket science, but you’d be amazed how many people start and try to run their businesses without having them in place.
Is there anything you would add to this list?